New Hampshire online lottery sues over gambling opinion

By HOLLY RAMERFebruary 15, 2019

CONCORD, N.H. (AP) — A U.S. Department of Justice legal opinion that could threaten online gambling and state-run lotteries is being challenged in court by the state of New Hampshire and the company that supports its iLottery system.

In a reversal from 2011, the department issued an opinion in November re-interpreting the federal Wire Act, which was enacted in 1961 to target the mob and prohibits interstate wagering. During the Obama administration, the department said online gambling within states that does not involve sporting events would not violate federal law, but in the November opinion, the officials said the law applies to any form of gambling that crosses state lines.

That raised concerns about the viability of multi-state online poker agreements, as well as state lotteries, and department lawyers acknowledged in their opinion that it was likely to be challenged in court. That happened Friday, when the New Hampshire Lottery Commission filed a lawsuit in federal court Friday saying the opinion subjects its employees to prosecution, creates uncertainty about whether it should cease operations and could cost the state more than $90 million a year.

Only a small portion of that total comes from the “iLottery” platform the state launched in September and is expected to bring in $4 to $6 million in the fiscal year that starts in July. But the broadest interpretation of the opinion would prohibit all lottery-related activities that use the internet, Attorney General Gordon MacDonald argued in the complaint. That includes transmission of data to backup servers set up in other states.

New Hampshire law requires that all net lottery profits go toward education funding. Since 1964, that has amounted to more than $2 billion.

“Today New Hampshire is taking action to protect public education,” Gov. Chris Sununu said in a statement. “The opinion by DOJ puts millions of dollars of school funding at risk, and we have a responsibility to stand up for our students.”

The lawsuit calls the opinion arbitrary, capricious and an abuse of discretion and cites a 1991 U.S. Supreme Court regarding the 10th amendment to argue that Congress must make its intent clear when it legislates in areas traditionally regulated by the states.

“There is no indication in the plain language of (the Wire Act), its structure, its purpose, or its legislative history of an unmistakable Congressional intent to outlaw state-conducted lottery activity,” MacDonald wrote. “If Congress wishes to criminalize the interstate transmissions required to operate state-conducted lotteries, it must do so in clear, unmistakable language. Congress has not done that in the Wire Act. ”

The Department of Justice declined to comment.

Nevada, New Jersey and Delaware legalized online gambling after the 2011 opinion, and the three states have agreements allowing poker players to compete online across the states. Pennsylvania became the fourth state to legalize online casino gambling in 2017. New Hampshire is among at least nine states that allow lottery tickets to be purchased online, according NeoPollard Interactive, which provides New Hampshire’s iLottery hardware and software and filed a similar suit.

The company’s attorney, Matthew McGill, called the justice department’s opinion a “lawless act.”

“This opinion would subject to felony prosecution conduct that two court of appeals, including the First Circuit, have said is lawful,” he said in a statement. “This is an outrageous and dangerous usurpation of authority.”